AccorHotels' Jean-Jacques Dessors and Olivier Granet discuss the merger with FRHI Hotels & Resorts, at Sofitel Downtown Dubai AccorHotels' Jean-Jacques Dessors and Olivier Granet discuss the merger with FRHI Hotels & Resorts, at Sofitel Downtown Dubai

AccorHotels has officially announced the acquisition of FRHI Hotels & Resorts, following the general meeting of shareholders, which took place yesterday, on July 12.

The combined portfolio for AccorHotels in the Middle East region, including properties in operation as well as those under development now stands at 150, equivalent to 45,000 rooms, with 50 of these properties in the luxury and upscale sector.

This morning, at a press conference held in Dubai, AccorHotels Middle East MD and COO Olivier Granet, and Accorhotels CEO HotelServices Mediterranean, Middle East and Africa Jean-Jacques Dessors discussed the implications of the merger for the Middle East region.

According to Dessors, the shareholder vote yesterday saw 73% of shareholders participate in the vote, with 98% of those voting supporting the transaction. “The value is significant,” added Dessors, estimating the deal at an approximate value of €2.7 billion to €2.9 billion (allowing for foreign exchange differences, he said), and currently equivalent to up to US $3.2 billion (AED 11.8 billion). The transaction, Dessors revealed will involve 68% new shares.

The merger sees AccorHotels’ bring under its fold FRHI’s three luxury hotel brands, which are Fairmont, Raffles and Swissôtel. Granet and Dessors made the point that this shifts Accor’s current portfolio slightly towards the luxury and upper-scale segment, with a total of 20 hotel brands now in the portfolio, eight of which are now in the luxury and upper-scale segment.

Dessors commented: “We [AccorHotels] were considered leaders in economy and mid-scale.” However, the merger, he argued, now brings the added value to the group of FRHI’s luxury “know-how”. As a result of the merger, Dessors ranked AccorHotels as sixth in the world in terms of number of bedrooms, (adding that this figure is currently 570,000 rooms worldwide), and placing the group first in the world for the number of properties its operates itself.

The move towards luxury for AccorHotels is a shift against the current climate in Dubai, which has seen several hoteliers swell their mid-market and economy options ahead of EXPO 2020. In response to this, Granet clearly highlighted his belief in the emirate’s ability to continue to attract guests to the luxury sector. Granet also revealed that AccorHotels is collaborating with Emirates Airline, DTCM and Dubai Parks and Resorts to continue protecting source markets for both luxury and mid-scale properties.

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According to Dessors, FRHI properties went live on Accor’s booking platforms, available to book online via AccorHotels as of yesterday. The deadline, he added, for bringing together other aspects of the organisation is October. However, he later added that it would take more than one year to have a full integration between the two companies.

An example of the “synergy” that must now be achieved between the two hotel groups, Dessors said, is bringing together the procurement processes of the two companies. FRHI and AccorHotel will also discuss bringing together their two corporate offices in Dubai to create one. This will not, Dessors was keen to make clear, necessarily result in redundancies of current employees. “We are not just buying brands, we are buying know-how and talent,” he added.

In contrast, Dessors and Granet were keen to see the acquisition as a positive for employees from both hotel groups, with Granet commenting that “as of today FRHI employees can access job opportunities in Accor and vice versa."

One result of the merger that Granet commented was a “positive” for the Middle East in particular was the addition of three new board members representing the Middle East: Ali Bouzarif and Aziz Aluthman Fakhroo from Qatar Investment Authority (QIA), and Sarmad Zok from Kingdom Holding Company (KHC). The transaction now gives QIA a 10.4% stake in Accor’s share capital, and a 5.8% stake to KHC.

Another result of the merger is the re-positioning of FRHI’s current COO Chris Cahill, into a newly created role as the group’s CEO of luxury brands. This move, Granet said, was an attempt to “reinforce operational expertise.” He added: “Luxury is about know-how, expertise and talent.”

Commenting on the merger of AccorHotels and FRHI Hotels & Resorts, AccorHotels chairman and CEO Sébastien Bazin said: “The acquisition of these three emblematic luxury hotel brands is a historical milestone for AccorHotels.

“By leveraging the operational synergies between FRHI and AccorHotels, we are well-positioned to accelerate the growth of our luxury brands and offer guests even more exciting hotel choices and destinations to explore.”

To see Sébastien Bazin talk in further detail about the acquisition of FRHI Hotels & Resorts by AccorHotels, watch the video below.